Keys Financial Has Done Extremely Well in Recent Years,and Its

question 36

Multiple Choice

Keys Financial has done extremely well in recent years,and its stock now sells for $175 per share.Management wants to get the price down to a more typical level,which it thinks is $25 per share.What stock split would be required to get to this price,assuming the transaction has no effect on the total market value? Put another way,how many new shares should be given per one old share?

• A)6.98
• B)7.00
• C)7.35
• D)7.72
• E)8.10

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Definitions:

Reserves

Funds or material set aside or saved for future use, often referring to cash or other assets held by a bank or a company.

Fed

The Federal Reserve System, the United States' central bank, holds responsibility for implementing monetary policy.

Money Supply

The entire aggregate of monetary assets available at a certain period in an economy.

Federal Reserve System

The central banking system of the United States, responsible for monetary policy, banking supervision, and financial services.